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DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade Bureau

Industry Circular

Number: 2014-01
Date: May 15, 2014

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Automated Commercial Environment Pilot Program; Alternate Method for Participants to Fulfill TTB Requirements for Importation

To:   All Importers of Distilled Spirits, Wine, Beer, Tobacco Products, Processed Tobacco, and Cigarette Papers and Tubes, and U.S. Government and Industrial Alcohol Users, Who Are Participating in the Automated Commercial Environment Pilot Program.

1.   Purpose.

In a Federal Register notice published on August 7, 2015 (80 FR 47558), the Alcohol and Tobacco Tax and Trade Bureau (TTB) announced a pilot program to test the collection and transfer of certain import data through the Automated Commercial Environment (ACE), which is maintained by U.S. Customs and Border Protection (CBP) This pilot is part of TTB's effort to implement the International Trade Data System (ITDS).  The pilot program is open to importers of distilled spirits, wine, beer, tobacco products, processed tobacco, and cigarette papers and tubes, and U.S. government and industrial alcohol users (referred to in this document, collectively, as "importers"). 

This industry circular describes how importers participating in the pilot program will submit specific information through ACE, either as an approved alternative to procedures prescribed in the TTB regulations or as a means to fulfill or demonstrate compliance with regulatory requirements.  Importers must apply to participate in the pilot program; approval of an application will constitute approval to satisfy regulatory requirements through the method described here.

2.   Background on the International Trade Data System, the Automated Commercial Environment, and the Pilot Program. 

ITDS is an interagency program to establish a single electronic access point (or “single window”) through which importers and exporters may submit the data required by government agencies for international trade transactions.  The Security and Accountability for Every Port Act of 2006 (SAFE Port Act, Pub L. 109–347) mandated participation in ITDS for all agencies that require documentation for clearing or licensing the importation and exportation of cargo.  On February 19, 2014, the President issued Executive Order 13659, “Streamlining the Export/Import Process for America’s Businesses,” which mandated that CBP complete ITDS, and partner agencies begin using it, by December 31, 2016.

TTB is working with CBP as a Partner Government Agency (PGA) to implement ITDS for the importation and exportation of alcohol and tobacco products subject to TTB’s regulatory authority.  TTB has worked with CBP to develop a PGA Message Set in ACE for the collection of TTB-specific import data.  Each PGA Message Set defines the agency-specific information that importers will submit directly through the Automated Broker Interface (ABI), which transfers data into ACE as part of the CBP entry process.  TTB has prepared a document, the ACE Filing Instructions for TTB-Regulated Commodities (Filing Instructions), which sets forth TTB’s PGA Message Set (the TTB Message Set) and describes how to input the TTB-specific data elements into ACE through the ABI.   

Along with other agencies, TTB will participate in a CBP pilot test for collecting information using the TTB Message Set in ACE.  The goal of the pilot program is to allow TTB, CBP, and importers to prepare for an efficient transition to ACE. 

Industry participation in the pilot program is entirely voluntary, but importers must apply for, and obtain from TTB, permission to participate in the pilot as outlined below.  In addition, only industry members who have permits from TTB to import distilled spirits, wine, beer, tobacco products, and processed tobacco; U.S. government and industrial alcohol users who have permits from TTB; and importers of cigarette papers and tubes are eligible to participate.  Import brokers or other third parties are not eligible to participate in the pilot.  However, an import broker may file data in ACE on behalf of an importer who is approved to participate.

To be eligible to apply for this pilot, importers must have the ability to file ACE entry summaries and ACE cargo releases, and must file entries for the TTB-regulated commodities listed earlier in this document.  All pilot program participants are required to use a software program that has completed ACE certification testing for the PGA Message Set.  

The pilot program will continue until TTB notifies participants of its termination, after which approval to participate and use the alternate method described below will also be terminated.

To apply to participate in the pilot program, please contact John Kyranos, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, Washington, DC  20005; telephone (202) 453–1039, extension 001; or e-mail ITDS@ttb.gov.  Applications must be submitted on letterhead and signed by a person authorized to request to use an alternate method on behalf of the TTB-regulated importer.

3.   TTB Regulations on Imports. 

The TTB regulations at 27 CFR parts 1, 4, 5, and 7 set forth requirements pursuant to the Federal Alcohol Administration Act (FAA Act) regarding the importation of wine, distilled spirits, and malt beverages.  Section 1.20 (27 CFR 1.20) requires an FAA Act "Basic Permit" for importers of wine, distilled spirits, and malt beverages.  Parts 4, 5, and 7 provide that, in order for imported wine, distilled spirits, or malt beverages to be released from customs custody, a certificate of label approval must be “deposited with the appropriate Customs officer at the port of entry.”  See 27 CFR 4.40, 5.51, and 7.31, respectively, regarding wine, distilled spirits, and malt beverages.  Parts 4 and 5 also include several requirements related to foreign certificates required for the importation of certain wine or distilled spirits. These include Certificates of Origin (Scotch, Irish, Canadian and other whiskies); Certificates of Age and Origin (brandy, Cognac, rum, and Tequila); Certifications of Vintage Wine; Certifications of Origin and Identity (wine, when required by the appropriate foreign government), and Certifications of Proper Cellar Treatment of Natural Wine. In general, these certificates are required to “accompany” the imported commodities.  See 27 CFR 4.27, 4.45, and 5.52.

The TTB regulations at 27 CFR part 27 set forth requirements related to the provisions of the Internal Revenue Code of 1986, as amended (IRC), that apply to importations of distilled spirits, wine, and beer.  Many regulations in part 27 require certain documents to be submitted to CBP.  One example of a requirement that documentation be submitted to CBP pertains to the importation of distilled spirits in bulk without payment of tax, which is subject to the requirements in subparts H and I of part 27.  For such releases, the person importing the spirits must, among other things, prepare a record of information and give it to the customs officer upon release of the spirits from customs custody.  See 27 CFR 27.172.  Another example pertains to imports of distilled spirits withdrawn free of tax by, and for use of, a U.S. government agency.  Current TTB regulations require the government agency to provide a photocopy of its permit to CBP.  See 27 CFR 27.183.

The TTB regulations at 27 CFR part 26 address distilled spirits, wine, and beer brought into the United States from Puerto Rico or the U.S. Virgin Islands and contain provisions similar to those in part 27, as well as requirements associated with tax-free shipments to industrial alcohol users (see 26 U.S.C. 29.292).  Because Puerto Rico is within the customs territory of the United States, shipments from Puerto Rico are not treated as imports by CBP, so the pilot program does not include such shipments.  However, shipments of distilled spirits, wine, and beer from the U.S. Virgin Islands are treated by CBP as imports, captured in ACE, and, as a result, are included in the pilot program.    

The importation of tobacco products, processed tobacco, and cigarette papers and tubes is addressed in 27 CFR part 41.  Among other requirements, importers of tobacco products or processed tobacco, before engaging in such business, must apply for and obtain a permit from TTB.  The regulations at 27 CFR 41.81 provide for certain information to be submitted to CBP regarding imported tobacco products or cigarette papers or tubes, and 27 CFR 41.86 requires information to be submitted to CBP either electronically or by using a specified form in order for tobacco products or cigarette papers and tubes imported and released without payment of tax to be delivered to a specified TTB-permitted or qualified entity.

4.  Alternate Method.

TTB may authorize the use of an alternate method or procedure to fulfill the regulatory requirements in 27 CFR parts 26, 27, and 41, under §§ 26.331, 27.221, and 41.26, respectively.  The use of an alternate method or procedure is subject to certain conditions. 

In addition, TTB regulations provide for electronic submissions of forms and electronic signatures in 27 CFR part 73.  Section 73.40 (27 CFR 73.40) provides that a regulated entity may satisfy any requirement in the TTB regulations to submit a form to another agency by submitting the form to the agency by electronic means, as long as the agency provides for, and authorizes, the electronic submission of the form and any registration and other requirements to use the electronic submission functionality are met.  In part 73, the term “form” includes all documents required to be submitted.

Unlike the IRC, the FAA Act and its implementing regulations do not provide for the use of alternate methods for compliance.  However, TTB has determined that ACE and the Filing Instructions allow importers to demonstrate their compliance with current requirements in 27 CFR parts 1, 4, 5, and 7, as well as FAA Act-related requirements in 27 CFR parts 26 and 27.  For example, the regulations in 27 CFR 4.45 require a certificate of origin and identity issued by a foreign government to accompany the invoice for certain imported wine.  Using the Filing Instructions, the importer would certify in ACE that such a certificate is in the importer's possession and will be made available upon request from TTB or CBP during or after importation.  TTB or CBP could request that the importer upload an image of the certificate into ACE or provide a paper copy of the document.  The purpose of the regulation, ensuring that a foreign government has certified to the wine's origin and identity, would be fulfilled, even though the certificate would not "accompany the invoice."

Therefore, for importers who have applied and been approved to participate in the pilot program, TTB is authorizing the use of ACE consistent with the Filing Instructions as a method to submit documentation required by the regulatory provisions listed in the next section.  Through approval to participate in the pilot, TTB is authorizing participants to submit electronically the information specified in the Filing Instructions.  When approved importers file electronically and make documents available upon request, TTB will exercise its enforcement discretion to relieve any applicable regulatory requirements to submit paper documents at importation for approved pilot program participants who submit such information electronically. 

5.  Regulatory Requirements Satisfied by Use of ACE and the Filing Instructions.

The chart below lists TTB regulations that require the submission of paper forms to CBP or that paper forms physically accompany shipments.  Approved participants in the pilot program may satisfy these requirements by using ACE consistent with the Filing Instructions, as described below.  Participants in the pilot program will also be expected to provide additional information in order to participate in the pilot program, as detailed in the next section of this document.

Regulatory documentation requirement

Citation

How importer satisfies requirement in ACE

Certificate of vintage date for imported wine

27 CFR 4.27(c)(3)

Follow Filing Instructions to attest that certificate is in importer's possession; retain certificate and make available upon request.

Original or copy of certificate of label approval (for imported wine, distilled spirits, and malt beverages)

27 CFR 4.40(a) (wine), 5.51(a) (distilled spirits), 7.31(a) (malt beverages), 26.202 (alcohol beverages from U.S. Virgin Islands)

File certificate of label approval identification number according to Filing Instructions and retain certificate.

Certification of origin and identity for certain imported wine

27 CFR 4.45(a)

Follow Filing Instructions to attest that certificate is in importer's possession; retain certificate and make available upon request.

Certificate of nonstandard fill for imported wine and distilled spirits

27 CFR 4.46 (wine), 5.53 (distilled spirits)

Retain documentation only.  Do not input information in ACE or submit documentation to CBP to meet this specific requirement except upon request.

Statement of process for imported gin with label bearing the word "distilled" as part of the designation

27 CFR 5.51(d)

Retain documentation only.  Do not input information in ACE or submit documentation to CBP to meet this specific requirement except upon request. 

Certificates of age and origin for certain imported distilled spirits

27 CFR 5.52

Follow Filing Instructions to attest that certificate is in importer's possession; retain certificate and make available upon request.

FAA Act permit for importation of distilled spirits, wine, or malt beverages from the U.S. Virgin Islands

27 CFR 26.202

File permit number according to Filing Instructions; retain permit.

Certificate from U.S. Virgin Islands manufacturer

27 CFR 26.205(b), 26.260, 26.302(b)

File any information required under that regulation that is captured by ACE, whether through the TTB Message Set or through data elements collected by CBP for CBP purposes; retain as a record all information required under that regulation.

Consignee's permit for tax-free alcohol shipments from the U.S. Virgin Islands (industrial alcohol users and U.S. government users)

27 CFR 26.292

File permit number; retain permit.

Record of shipment for industrial alcohol or specially denatured spirits from the U.S. Virgin Islands

27 CFR 26.294

File any information required under that regulation that is captured by ACE, whether through the TTB Message Set or through data elements collected by CBP for CBP purposes; retain as a record all information required under that regulation.

Record of shipment for completely denatured alcohol or products made from completely denatured spirits from the U.S. Virgin Islands

27 CFR 26.296

File any information required under that regulation that is captured by ACE, whether through the TTB Message Set or through data elements collected by CBP for CBP purposes; retain as a record all information required under that regulation.

Package gauge record for bulk distilled spirits from the U.S. Virgin Islands

27 CFR 26.301, 26.302(b)

File any information required under that regulation that is captured by ACE, whether through the TTB Message Set or through data elements collected by CBP for CBP purposes; retain as a record all information required under that regulation.

Approval of distinctive liquor bottles, including photograph

27 CFR 26.314 (U.S. Virgin Islands), 27.204 (other imports)

Retain documentation only.  Do not input information in ACE or submit documentation to CBP to meet this specific requirement except upon request. 


Documentation of effective tax rate computation

27 CFR 27.76(d)

File quantity of proof liters and applicable tax rate through data elements collected by CBP for CBP purposes; retain documentation.

Documentation of standard effective tax rate computation

27 CFR 27.77(d)

File quantity of proof liters and applicable tax rate through data elements collected by CBP for CBP purposes; retain documentation.

Transfer record and package gauge record for imported bulk distilled spirits

27 CFR 27.172

File any information required under that regulation that is captured by ACE, whether through the TTB Message Set or through data elements collected by CBP for CBP purposes; retain as a record all information required under that regulation.  

Permit for U.S. Government agency to withdraw distilled spirits free of tax

27 CFR 27.183

File permit number according to Filing Instructions; retain permit.

Information related to tobacco products and cigarette papers and tubes imported for consumption

27 CFR 41.81(c)

File any information required under that regulation that is captured by ACE, whether through the TTB Message Set or through data elements collected by CBP for CBP purposes; retain as a record all information required under that regulation. 

Form for release of imported tobacco products or cigarette papers and tubes from customs custody without payment of internal revenue tax

27 CFR 41.86(c)

The regulations provide for the use of electronic filing in lieu of the submission of the form to CBP. 

6.  Expectations for Participation in the Pilot Program.
     
Importers approved to participate in the pilot program will be expected to:

  • File some entries of TTB regulated commodities consistent with the TTB Message Set, as described in this Industry Circular.  The importer is not required to file all of its entries of TTB regulated commodities using the TTB Message Set, although participants are expected to file sufficient entries to test their use of the TTB Message Set.  When not using the TTB Message Set, importers will file paper documents with CBP consistent with the current text of the regulations.
  • File entries in ACE consistent with the Filing Instructions. The Filing Instructions may be updated during the pilot program based on CBP's and TTB's experience with the system, as well as feedback from importers and the general public.  TTB will notify pilot program participants when a new version of the Filing Instructions is available.  The most current version of the Filing Instructions will also be available on CBP's Web site
  • Make every effort to file all of the information specified in the Filing Instructions and in the Table in Section 5 that is applicable to the entry.  If filing all of the information specified in the Filing Instructions and in the Table in Section 5 is impossible or impractical, notify TTB as soon as possible and describe the problem, so TTB is aware of the problem and can address the issue. 
  • Provide additional information as described in the Filing Instructions.  The Filing Instructions generally mirror current regulatory requirements, providing means for importers to enter information electronically rather than in paper form.  However, the Filing Instructions do include the submission of some additional information.  Specifically, importers will provide their TTB importer permit number or Basic Permit number, as appropriate, when filing their entries, and provide employer identification numbers for consignees of certain entries.  This information is necessary for participation in the pilot so that TTB is able to easily associate each shipment of TTB-regulated commodities with the industry member participating in the pilot. 
  • Retain documentation and records of information for inspection by the appropriate TTB or customs officer.  

7.  Disclosure.

Participants in the pilot program will be asked if they consent to waive the confidentiality of their names as participants in the pilot program and the number of entries they file through the pilot program.  TTB understands that CBP plans to make this information publicly available.  The requested waiver of confidentiality applies only to disclosure of the name of the importer as a pilot participant and the number of entries filed using the TTB Message Set during the pilot program.

8.  Approval.

As noted earlier, TTB approval to participate in the pilot program is simultaneously an approval to use this alternate method, conditioned on the importer’s good-faith effort to meet the expectations described in Section 6 of this document.  This alternate method is not approved for use by anyone that TTB has not approved to participate in the pilot program.  If TTB revokes an importer's approval to participate in the pilot program, the approval to use this alternate method is also revoked, and the importer must submit import documentation to CBP and TTB consistent with the current regulations.  In addition, TTB may at any time modify or rescind approval to participate in this alternate method if we find that its application hinders effective administration of the TTB regulations or causes jeopardy to the revenue. 

Questions.  If you have any questions concerning this circular, please contact the Regulations and Rulings Division, by phone at (202) 453-2265 or by e-mail at ITDS@ttb.gov.

 

John Manfreda

John J. Manfreda
Administrator
Alcohol and Tobacco Tax and Trade Bureau

 
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